Economic data can be a fairly big mover on exchange rates and the rate has reacted today to worse UK economic news and a Spanish bond auction. The UK Manufacturing data today pointed to a contraction in output in the Manufacturing and Industrial sectors of the economy in February. This is bad news for the UK and raises the prospect of a triple dip recession.
Anyone buying euros may take some comfort from the fact the Spanish debt auction showed the cost of borrowing for Spain rising slightly and true this did knock the euro slightly. The main driver from last week on the euro was Mario Draghi’s comments that he expects things to improve in the future. If this is the case then the effects on the exchange rate will be two fold:
1 – The pound will weaken as investors holding GBP from last year due to fears over the euro zone outlook sell the GBP on news the euro zone is making progress
2 – The euro will strengthen as investors buy euros to benefit from the perceived longer term improvements in the economy
If you are making a currency exchange in the future I would be more than happy to explain what is driving current exchange rates and provide some assistance with a much better rate of exchange than you can currently achieve. For more information please contact me directly [email protected]